Small-car sales and gasoline prices: It's complicated

The average gasoline price in the United States is $3.541 a gallon, according to AAA.

For those of us with long commutes, that was good news after the $4-plus-a-gallon price earlier this year.

Then I thought about it more.

Don't get me wrong. Lower gasoline prices are good news on many levels: Most people generally have more optimism about the economy when gasoline prices stabilize and drop. And lower gasoline prices also mean most of us have more discretionary cash to spend on other purchases, such as possibly a new car.

But that's where it gets complicated. Many executives in the auto industry were counting on this being the year of the small car.

In January, at the Detroit auto show, a Ford Motor Co. executive excitedly pulled me aside to say: "This year is all about the C segment, Jamie. It's a big year, especially for us with the new Focus."

He was giddy anticipating Ford's potential share gain in the small-car segment.

Granted, Ford, Hyundai, Honda and others have launched or will launch redesigned compact cars this year. Many of the cars are selling well partly because of hot new body styles, added technology and reasonable pricing.

But nothing drives small-car sales better than high and unstable gasoline prices.

The falling prices at the pump could stall small-car sales. It's a segment that historically slows down in the fourth quarter anyhow.

But there is one definite saving grace this year for the segment.

Asian-brand loyalists could defer buying their Honda Civics or Toyota Corollas until the fall. That's when the automakers that suffered inventory shortages since the March 11 earthquake and tsunami disabled plants in Japan should finally be restocked.

That might not necessarily benefit my Ford executive, though.

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